David Bloom picked a perilous time to launch a company devoted to helping franchise businesses grow. But opportunity has arisen out of the gloom.
David Bloom is more than a year into a business venture that at one point could have easily qualified for the worst timing award of all-time.
It's a company he co-founded to help franchise businesses grow and raise capital. Of course, in October 2008 when Bloom launched the company, Sarasota-based Capital Idea Group, the nationwide credit crisis was just in its early stages.
The crisis has since subsided, but credit remains a huge obstacle for small businesses and franchise companies seeking to grow. Yet Bloom, despite the timing, has found a successful niche in consulting for franchise businesses.
Capital Idea has already signed 30 clients, for tasks ranging from finding real estate for new locations to new store design and construction consulting to simply marketing for customers. The company also assists clients with finding capital, including traditional bank loans, venture capital and angel investors. Says Bloom: “We do everything relative to the growth of the brand.”
Bloom declined to elaborate on Capital Idea's revenues or margins, only to say that the 12-employee firm has been profitable since it moved from a home office to a professional office suite in March.
“The first three months I was like holy moly,” says Bloom, a former senior executive with Quiznos sub sandwiches chain. “I thought a dozen clients in the first year would be a home run.”
Capital Idea has nearly tripled that projection though, through a combination of cold calling and networking with industry contacts. Bloom says the company is adding one or two clients a week and should surpass 100 by the middle of next year.
Capital Idea's clients range from the home service industry to several quirky niche food and beverage businesses. The roster of clients includes Duct Doctor, which services air quality in homes; Tea and Tumble, a franchise focused on providing activities for moms and children; and the New England Hot Dog Co.
Most of the company's clients are based outside the Gulf Coast, although one, Big Frog Custom T-Shirts & More, is based in St. Petersburg. The owners of Big Frog hired Capital Idea earlier this month to help it grow from 10 franchise stores to as many as 50 in the next few years.
Big Frog prints high-end graphic T-shirts, says Bloom, and its niche is in sticking to small orders, no more than 15 shirts. The owner, a former Polaroid executive, told Bloom he wants to grow the chain while competitors are scaling back.
“They know they need to grow,” says Bloom. “But they found out they don't know how to grow while making money at the same time.”
Bloom, whose family has had a home in Sarasota for several years, brings 25 years of franchise experience to Capital Idea Group, as does David Stein, the company's co-principal. Stein previously worked in brands and new products for the Home Shopping Network.
Bloom, meanwhile, got into Quiznos in the early 1990s, when the chain was still a small operation in and around Denver. Bloom would go on to open 150 stores in Texas and Colorado, before joining the company as a senior executive. J.P. Morgan bought the company in 2006, however, and Bloom says the financial services firm, “paid the senior managers to go away.”
David Bloom has been in the franchise business for 25 years, dating back to when he was running Quiznos franchises in suburban Denver. He now runs Capital Idea Group, a Sarasota firm that helps franchise businesses grow and raise capital.
Here are some of Bloom's tips for entrepreneurs and executives seeking to get into a franchise business:
• Do what you love: If you don't like being with people, says Bloom, don't go into restaurants, retail or service businesses. If you have a sales background, than a consulting or service company might be a good fit.
• Be brand conscious: Find a brand name with value that appeals to a wide variety of people over a long period of time, suggests Bloom. “You are investing for the long term,” says Bloom. “Because something is hot today doesn't mean that it will be around tomorrow. Seasonal products can also be very tough to make work, since your expenses continue well after the 'season' is over.”
• Don't over rely on the franchise headquarters: “The franchise brand can bring you great systems, marketing and support,” says Bloom, “but you are still the key to your success.” Take the always-be-selling approach and “don't wait for the phone to ring or the customer to walk in the door — you have to build your business every day.”